A Message From Our Affiliate Member, NUCA

With the goal of keeping you informed about news in the water and wastewater industry, WASDA is sharing the following message from our Affiliate Member NUCA:

“NUCA’s Government Relations obtained a copy of the White House’s initial principles for the presumed forthcoming infrastructure plan.

The plan is broken down into 8 primary principles, summarized below:

Infrastructure Incentives Initiative (50% appropriation): The lead federal agency will solicit project applications every 6 months. Projects will be weighted based on specific criteria (cost, sustainability, non-federal funding, etc.) and the highest weighted projects will receive grants that cannot exceed 20% of total project costs and states may not receive more than 10% of available funds.

Transformative Projects Program (10% appropriation): Makes federal funding available for infrastructure projects unable to secure financing due to ‘uniqueness’ of the program. These projects are must be transformative and thus carry higher risk than traditional infrastructure projects. Administered by the Department of Commerce, applicants will have 3 funding tracks to pursue: 1) Demonstration trial; 2) Project Planning; 3) Capitol Construction. Federal funding for each of these tracks is capped at 30%, 50%, and 80% respectively. These projects will require a minimum match requirement and a partnership agreement with the federal government.

Rural Infrastructure Program (25% appropriation): Specifically for rural areas with populations less than 50,000, will fund rural infrastructure projects by block grants. 80% of funds will be distributed based on a formula of rural lane miles ratio and rural population ratio. 20% of funds will be reserved for rural performance grants.

Private Activity Bonds: would allow broader categories of public-purpose infrastructure to utilize PABs, eliminate the AMT provision and the advance refunding prohibition of PABs, eliminate the state volume caps, and provide change-of-use provisions to preserve tax exemption of governmental bonds.

There are many unanswered questions surrounding allocations of funding, amount of total funding, and minimums/maximums for programs, infrastructure type, and state flexibility. If we assume the President’s budget will call for $200 billion as has been reported previously, dollar amount breakdowns would look like this:

Infrastructure Incentives Initiative: 50%, $100B

Transformative Projects Program: 10%, $20B

Rural Infrastructure Program: 25%, $50B

Federal Credit Programs: 7.05%, $14.1B

Federal Capital Financing Fund: 5%, $10B

This leaves 2.95%, $5.9B unallocated, but my guess would account for the cost, in loss of revenues, of expanding PABs. Remember that in each of these cases federal dollars will only be permitted to make up a portion of the total cost of the project, meaning the total infrastructure investment could be leveraged up to 10x.

The document then goes into the principles for infrastructure improvements for transportation including financing, highways, transit, rail and airports; water infrastructure including financing, water programs, inland waterways, water infrastructure resources; veteran’s affairs; and land revitalization. I have pulled out some of the most important below:

Transportation

Financing- Allow states flexibility to toll on interstates and reinvest toll revenues in infrastructure.
- Support airport and non-federal maritime and inland water way ports financing options through broadened TIFIA program eligibility.

Highways- Raise the cost threshold for major project requirements to $1 billion.
- Authorize utility relocation to take place prior to NEPA completion.

Transit- Require value capture financing as condition for receipt of transit funds for major capital projects (Capital Investment Grants).
- Eliminate constraints on use of public-private and public-public partnerships in transit.

Water Infrastructure

Financing- Authorize Clean Water State Revolving Fund for privately owned public purpose treatment works.
- Expand EPA’s WIFIA authorization to include flood mitigation, navigation and water supply.
- Eliminate requirement under WIFIA for borrowers to be community water systems.

Water Infrastructure Resources- Authorize user fee collection and retention by the Federal government and third parties under the WRDA Section 5014 pilot program
- Amend the Water Resources Development Act to allow for waiver of cost limits
- Expand WIFIA authorization to include Federal deauthorized water resource projects

While it is important to remember this is a draft, it is much more substantive than anything previously released by the White House or Congress. There are some very significant components within this blueprint that NUCA and our allies have been advocating for years:

-Eliminating the volume caps on Private Activity Bonds will allow greater flexibility for financing all sorts of infrastructure projects.
- Increasing authorization and funding for existing and well operating federal programs like WIFIA, TIFIA, and RUS will increase infrastructure project starts across the country.
- Eliminating regulatory burdens that limit public-private partnerships will provide greater flexibility in financing large infrastructure projects.
- Dedicating a significant portion of funding to rural areas will ensure projects are not strictly urban and help small communities upgrade and invest in infrastructure where they currently have difficulty.

Noticeably missing from document is mention of the Highway Trust Fund, its funding shortfall, and any sort of solution for HTF’s insolvency.

I will continue to keep you appraised as further details emerge. In the meantime, this should be viewed as a very positive sign for the prognosis of an infrastructure plan and the pursuit of NUCA’s infrastructure priorities.”